By John Tizard, Director, CPSP@LGiU and Member of the BiP Solutions Strategic Advisory Board

John Tizard explains how Competitive Dialogue – A practical guide is an essential text in understanding the procedure and how it should be implemented.

Any procurement process, and especially one based on the European Union’s Public Procurement Directives, could sound like a very dull subject for a book. However, public procurement is critical to both the domestic economy and the success of public services. The UK public sector procures over £79 billion of services a year from the private sector according to the Julius Review in 2008. Public infrastructure and increasingly complex public services are being procured from the business and third sectors. As public expenditure becomes tighter and public expectations of high-quality services increase, the effectiveness of public procurement will become even more critical.

Procurement should not be confused with commissioning. The latter is about determining needs and aspirations and the outcomes required to address them. It also involves deciding the optimum manner of securing the services to achieve these outcomes. In some cases, procuring services from the business and third sectors will be the best means of implementing commissioning decisions. Therefore, procurement practice has to be effective and efficient.

The Competitive Dialogue was created by the 2004 Public Procurement Directives as a new and more flexible solution for public authorities wanting to award contracts for complex infrastructure projects. It has been used for complex service procurements as well as for infrastructure across the public sector in the UK. Competitive Dialogue has attracted as many hostile or unfriendly critics as it has advocates. Many in the public and provider communities see it as too bureaucratic and expensive in terms of both financial and opportunity costs for those engaged in the process. Many providers believe that their bids are simply used as consultancy proposals by their prospective clients and/or that the client side simply takes the best from all the bidders and makes a composite solution based on this when it issues its invitation for Best And Final Offers. Providers may feel that their intellectual property right is at risk.

In his recent book, Competitive Dialogue – A practical guide, Michael Burnett, PPP expert at the European Institute of Public Administration (EIPA), states that “not all methods of using Competitive Dialogue have proved to be equally effective in promoting value for money for the public sector”. He continues: “Objective advice for public sector decision makers on when and how to use Competitive Dialogue effectively is hard to find.”

He is very right, but his book, written with the support of Martin Oder, addresses this gap. After assessing the different approaches used so far, the authors conclude that: “It’s time now to learn the lessons of how Competitive Dialogue has been used so far to be able to use it better in the future”.

Competitive Dialogue, when applied in a timely and effective fashion, can provide the basis for long-term sustainable partnerships between provider and client. However, when it is badly applied it can sow the seeds of antagonistic relations between client and provider.

The Treasury is currently reviewing its advice on Competitive Dialogue, but not its guidance or the regulations. It is essential that the public sector and the provider communities become more confident of when and how to use the process. The key is to ensure that the public sector client is absolutely sure of what it wants to secure and the parameters for the outcomes of its procurement. Therefore, we have to recognise that the success of procurement lies in the effective application of strategic commissioning.

Burnett concludes: “No-one has ever claimed that using Competitive Dialogue is an easy option but the stakes in terms of the need to improve Europe’s infrastructure and services and the effective implementation of key European policies, such as compliance with environmental legislation and the completion of the Internal Market, at an affordable cost are too high for it to fail”.

If Competitive Dialogue is read and its guidance followed, there could be significant improvements in public sector procurement outcomes.